“2017 was a year of significant pipeline progress where Seres obtained
promising SER-287 Phase 1b clinical and microbiome results in Ulcerative
Colitis, advanced SER-109 into a pivotal Phase 3 study for recurrent C.
difficile infection, and entered into a strategic collaboration with
MD Anderson and the Parker Institute for Cancer Immunotherapy to
initiate a clinical study to evaluate microbiome therapy effects in
improving the efficacy of checkpoint inhibitors in cancer patients,”
said Roger J. Pomerantz, M.D., President, CEO and Chairman of Seres.
“Seres also recently obtained preliminary SER-262 Phase 1b study results
in patients with primary C. difficile infection. The SER-262
results, the first ever from a rationally designed microbiome
development candidate, provide key mechanistic insights that will inform
the progress of Seres microbiome therapeutic candidates, including but
not limited to SER-262.”

Dr. Pomerantz continued: “Seres has an array of early and late clinical
stage, as well as pre-clinical stage microbiome programs in infectious,
metabolic, and immune diseases - each with compelling scientific and
clinical rationale. Our near-term focus will be on the highest priority
clinical programs to most effectively advance our pipeline: SER-287 for
Ulcerative Colitis; SER-109 for Recurrent C. difficile infection;
and the SER-401 Immuno-oncology program. We expect 2018 to be an
eventful year with continued SER-109 Phase 3 study execution, and the
initiation of both a next stage SER-287 Ulcerative Colitis clinical
study, as well as a clinical trial evaluating adjunctive microbiome
therapy in metastatic melanoma patients being treated with checkpoint
inhibitors.”

SER-287 administration resulted in a
dose-dependent improvement of both clinical remission rates and
endoscopic scores. Based on an intent to treat ‘missing data counted
as a failure’ analysis, 40% (6 of 15) of patients in the vancomycin
pre-treatment, daily SER-287 dosing arm achieved clinical remission;
whereas in the placebo group 0% (0 of 11) achieved this endpoint
(p-value = 0.0237).

High clinical response rates to placebo
that were not statistically differentiated from the SER-287 treatment
arms were also observed. Clinical response is a subjective endpoint
that is prone to high variability and high placebo rates, as
previously observed in several other UC trials. In the most recent FDA
regulatory guidance in August 2016, clinical remission is the only
recommended primary endpoint in UC registrational studies.

The
SER-287 safety and tolerability profile was favorable. Study results
demonstrated no imbalance in adverse events in patients treated with
SER-287, as compared to placebo. There were no drug-related serious
adverse events associated with SER-287.

Analyses of study
microbiome data demonstrated that SER-287 induced dose-dependent
engraftment of SER-287-derived bacterial species. Differences in
specific bacterial engraftment signatures were found to be associated
with clinical remission. Bacterial engraftment of SER-287-derived
bacterial species was durable for at least four weeks after
administration of the final SER-287 dose, when final data microbiome
samples were collected. In the 11 patients in this trial who achieved
clinical remission (all of whom received SER-287), none had flares
during the 6 months following SER-287 treatment. Finally, histologic
improvement scores were demonstrated to be higher in patients treated
with daily SER-287, as compared to placebo.

Seres is in
discussion with the FDA regarding the SER-287 study design and plans
to initiate the next clinical study of SER-287 in UC patients in
mid-2018.

SER-287 Orphan Drug Designation in Pediatric UC: The FDA has
granted Orphan Drug Designation to Seres’ microbiome therapeutic
candidate SER-287 for the treatment of UC in pediatric patients. The
FDA’s designation of SER-287 follows a review of the data that
established the potential uses for SER-287.

Continued execution of the SER-109 ECOSPOR III Phase 3 study: Seres
continues to progress its SER-109 Phase 3 clinical study, and plans to
enroll approximately 320 patients with multiply recurrent C.
difficile infection, at sites in both the U.S. and Canada. Based
on previously disclosed interactions with the FDA, ECOSPOR III has
been designated a Phase 3 trial and the Company expects that this
single pivotal study could support SER-109 registration and approval.
SER-109 has been designated by the FDA as a Breakthrough Therapy and
has obtained Orphan Drug Designation.

Preliminary SER-262 Phase 1b study results: Seres obtained
preliminary clinical and microbiome results from the SER-262 Phase 1b,
first-in-human, dose-escalation clinical study of SER-262 in patients
with primary C. difficile infection. SER-262 is the first
rationally-designed, fermented microbiome therapeutic candidate ever
evaluated in patients. Clinical data have been obtained from seven of
the eight planned dose escalation patient cohorts. Each cohort
included 10 patients receiving SER-262 and two patients receiving
placebo. Based on the first seven patient cohorts, SER-262 had no
drug-related serious adverse events reported. No relevant differences
were observed in the relative risk of recurrence rate in patients
administered SER-262, as compared to placebo; however, this small
cohort-based, first-in-human Phase 1b study was not powered to detect
a statistically significant difference in recurrence rates. A small
group of placebo treated patients were included in this study and, in
this group, no recurrences were observed. Of note, a low C.
difficile recurrence rate was observed in patients treated with
Vancomycin and SER-262, as compared to those treated with
Metronidazole and SER-262 (4% versus 31%, respectively). This
difference was statistically significant with a p value of 0.0049. The
medical literature suggests a recurrence rate of about 25% in patients
treated solely with Vancomycin for primary C. difficile
infection. Our data suggest that treatment with Vancomycin, followed
by SER-262, results in more robust and kinetically more rapid
engraftment, and thus may lead to corresponding clinical efficacy.
This new finding will be further evaluated to inform future
development efforts.

Preliminary SER-262 microbiome
analysis has been conducted on the first five, lowest dose cohorts to
assess drug pharmacokinetics. A majority of SER-262-derived strains
were detected in patients receiving SER-262; detection of strains was
variable across subjects. This is the first-time engraftment of
bacteria from a fermented microbiome drug candidate has been
demonstrated in the microbiome of humans. Partial engraftment of
strains was also a characteristic observed in our SER-109 clinical
studies, and has been reported in fecal microbiota transplant
treatment of C. difficile infection. In patients where SER-262
engraftment was observed, broader microbiome changes were also
observed, indicating that a limited number of engrafting species may
cause global restructuring of the human microbiome. Microbiome profile
differences, based on the antibiotics used to treat each patient’s C.
difficile infection, were also observed. Vancomycin led to more
rapid and robust engraftment of SER-262 bacterial strains, as compared
to Metronidazole. More detailed microbiome and metabolomic analyses
remain ongoing. These unique SER-262 proprietary human data sets will
be used to inform future development of SER-262 and other fermented
Seres therapeutic candidate, including but not limited to SER-301 for
Inflammatory bowel disease (IBD) and SER-155 for hematopoietic stem
cell transplantation (HSCT).

Collaboration with MD Anderson Cancer Center and the Parker
Institute for Cancer Immunotherapy: Seres, MD Anderson Cancer
Center (MD Anderson), and the Parker Institute for Cancer
Immunotherapy (Parker Institute), formed a collaboration to evaluate
the potential of Seres’ microbiome therapeutic candidates to improve
the outcomes of cancer patients treated with immuno-therapy checkpoint
inhibitors. The collaborators plan to initiate a randomized,
placebo-controlled study at MD Anderson, sponsored by the Parker
Institute in patients with metastatic melanoma this year. The clinical
trial will evaluate the impact of an anti-PD-1 checkpoint inhibitor
with adjunctive microbiome therapy on patient outcomes. Seres also
received an exclusive option, with pre-defined financial terms, to
license intellectual property rights from MD Anderson related to the
use of bacteria in combination with checkpoint inhibitors.

Financial Results

Seres reported a net loss of $89.4 million for the full year, as
compared to a net loss of $91.6 million for the prior year. Seres
reported a net loss of $29.0 million for the fourth quarter of 2017, as
compared to a net loss of $25.3 million for the same period in 2016. The
fourth quarter net loss was driven primarily by clinical and development
expenses, personnel expenses, and ongoing development of the Company’s
microbiome therapeutics platform. The fourth quarter net loss figure was
inclusive of $3.1 million in recognized revenue associated with the
Company’s collaboration with Nestlé Health Science.

Research and development expenses for the fourth quarter 2017 were $24.0
million, as compared to $20.3 million for the same period in 2016. The
research and development expense was primarily related to Seres’
microbiome therapeutics platform, the clinical development of SER-109,
SER-262 and SER-287, as well as the Company’s and immuno-oncology
preclinical programs.

General and administrative expenses for the fourth quarter were $8.8
million, as compared to $8.5 million for the same period in the prior
year. General and administrative expenses were primarily due to
headcount, professional fees, and facility costs.

The decrease in the Company’s cash, cash equivalents and investments
balance during the quarter was $21.3 million. Seres ended the fourth
quarter with approximately $150.0 million in cash, cash equivalents and
investments.

Financial Expectations

Based on the Company’s current operating plan, cash resources are
expected to fund operating expenses and capital expenditure
requirements, excluding net cash flows from future business development
activities or potential incoming milestone payments, through the first
quarter 2019.

This projection is a revision to the previous cash funding timing
guidance of through 2018.

Seres is eligible to receive a substantial milestone payment, not
considered in the financial guidance update, associated with the planned
initiation of the next SER-287 clinical study.

Conference Call Information

Seres’ management will host a conference call today, March 8, 2018, at
8:00 a.m. ET. To access the conference call, please dial (844) 277-9450
(domestic) or (336) 525-7139 (international) and reference the
conference ID number 5092388. Accompanying slides will be made available
on the Seres website prior to the call. To join the live webcast, please
visit the “Investors and Media” section of the Seres website at www.serestherapeutics.com.

A webcast replay will be available on the Seres website beginning
approximately two hours after the event and will be archived for
approximately 21 days.

About Seres Therapeutics

Seres Therapeutics, Inc., (Nasdaq:MCRB) is a leading microbiome
therapeutics platform company developing a novel class of biological
drugs that are designed to treat disease by restoring the function of a
dysbiotic microbiome, where the natural state of bacterial diversity and
function is imbalanced. Seres’ lead program, SER-109, has obtained
Breakthrough Therapy and Orphan Drug designations from the U.S. Food and
Drug Administration and is in Phase 3 development for multiply recurrent C.
difficile infection. Seres’ clinical candidate SER-287 has
successfully completed a Phase 1b study in patients with
mild-to-moderate Ulcerative Colitis. Seres is also evaluating SER-262, a
rationally-designed microbiome therapeutic candidate, in a Phase 1b
study in patients with primary C. difficile infection. For more
information, please visit www.serestherapeutics.com.
Follow us on Twitter @SeresTx.

Forward-looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release that do not relate to matters
of historical fact should be considered forward-looking statements,
including relating to our prioritization of our assets, our development
plans, the ability of ECOSPOR III to support SER-109 approval, ECORSPOR
III enrollment, the promise and potential impact of any of our
microbiome therapeutics or clinical trial data, our plans to initiate
clinical studies of SER-287 and in I-O, the timing and results of any
clinical studies, and the sufficiency of cash to fund operations.

These forward-looking statements are based on management’s current
expectations. These statements are neither promises nor guarantees, but
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements,
including, but not limited to, the following: we have incurred
significant losses, are not currently profitable and may never become
profitable; our need for additional funding; our limited operating
history; our unproven approach to therapeutic intervention; the lengthy,
expensive, and uncertain process of clinical drug development, including
potential delays in regulatory approval; our reliance on third parties
and collaborators to conduct our clinical trials, manufacture our
product candidates, and develop and commercialize our product
candidates, if approved; our lack of experience in manufacturing,
selling, marketing, and distributing our product candidates; failure to
compete successfully against other drug companies; protection of our
proprietary technology and the confidentiality of our trade secrets;
potential lawsuits for, or claims of, infringement of third-party
intellectual property or challenges to the ownership of our intellectual
property; our patents being found invalid or unenforceable; risks
associated with international operations; our ability to retain key
personnel and to manage our growth; the potential volatility of our
common stock; our management and principal stockholders have the ability
to control or significantly influence our business; and we are currently
subject to securities class action litigation. These and other important
factors discussed under the caption “Risk Factors” in our Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission,
or SEC, on November 8, 2017 and our other reports filed with the SEC,
including the Annual Report we intend to file later today, could cause
actual results to differ materially from those indicated by the
forward-looking statements made in this press release. Any such
forward-looking statements represent management’s estimates as of the
date of this press release. While we may elect to update such
forward-looking statements at some point in the future, we disclaim any
obligation to do so, even if subsequent events cause our views to
change. These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of this
press release.

SERES THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

December 31,

2017

2016

Assets

Current assets:

Cash and cash equivalents

$

36,088

$

54,539

Investments

113,895

138,704

Prepaid expenses and other current assets

5,095

5,126

Total current assets

155,078

198,369

Property and equipment, net

32,931

36,125

Long-term investments

—

36,752

Restricted cash

1,513

1,400

Total assets

$

189,522

$

272,646

Liabilities and Stockholder's Equity

Current liabilities:

Accounts payable

$

7,033

$

7,587

Accrued expenses and other current liabilities

12,513

10,812

Deferred revenue - related party

12,079

12,058

Total current liabilities

31,625

30,457

Lease incentive obligation, net of current portion

8,989

10,730

Deferred rent

2,233

2,072

Deferred revenue, net of current portion - related party

84,847

96,756

Other long-term liabilities

1,129

—

Total liabilities

128,823

140,015

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.001 par value; 10,000,000 shares authorized at
December 31, 2017 and 2016; no shares issued and outstanding at
December 31, 2017 and 2016

—

—

Common stock, $0.001 par value; 200,000,000 shares authorized at
December 31, 2017 and 2016; 40,571,015 and 40,355,753 shares issued
and outstanding at December 31, 2017 and 2016